Policy —

Flash flood: the (very short) story of YouTube

Remember when video on the Internet was painful? There were low bandwidth caps …

You might feel like access to online video clips is one of those "inalienable rights" you hear so much about. The Internet of 2009 is awash in video content, from your favorite Seinfeld episodes to homemade videos of cats playing the piano—and everything in between. And you can get the material you're looking for from a plethora of sources. And I really do mean plethora in the most literal of senses, where it translates into surfeit, excess, and overabundance. If you want to share a clip with the world, you can go to YouTube or MySpace TV, DailyMotion or Metacafe, Vimeo or Truveo—and the list goes on and on. Video hosting is now a very mature field with lots of consumer choice and its own set of conventions and traditions.

But in this seemingly unending cornfield of choices, YouTube is the cob that rises far above the rest. It is the most popular video service today, and the fourth-most-visited site on the entire Internet, according to the Alexa traffic-tracking service. On weekends, YouTube skips past Yahoo! to the number three spot. YouTube is probably the site you think of first when you're looking for videos to watch online, or when you need to host your own clips. And with a staggering four years of history, you can call YouTube the granddaddy of them all. The graybeard. The old pro. Yoda or Methuselah.

That's right: in 2004, there was no YouTube. Most of the other video sharing sites we use today didn't exist either. YouTube came along in early 2005, and changed how we use the Internet in an instant.

The Dark Ages

Back in 2004, finding video content online wasn't as quick and easy as searching your favorite video site and blasting away. You could find clips scattered across websites, FTP shares, peer-to-peer networking services like KaZaA, Gnutella, or relative newcomer BitTorrent, but it was a multistep process that left much to be desired.

First, you had to find the files you wanted and download them, then hope that you had the correct audio and video codecs installed to be able to watch the darn thing in Windows Media Player, Quicktime, or RealPlayer. That was easier said than done for the average user, as the technical juggling involved could require some rare power of geekdom. On top of that, site owners often had bandwidth caps on their accounts, and you didn't need to download a 100-megabyte video too many times to run into those limits.

I know, it sounds medieval and torturous, and it was a wonder that anybody could watch digital videos at all. But digital video cameras were coming down in price and going up in popularity. Meanwhile, broadband access was coming into its own and the ever-increasing power of modern chips from Intel and AMD was begging for a video workout on your desktop. The time was ripe for a change.

From zero to a million a day

YouTube was not the first video hosting service on the Web, and we could argue all day over whether it was the best. But co-founders Steve Chen, Chad Hurley, and Jawed Karim kickstarted the site with some solid business ideas that quickly made it the obvious choice for would-be clip publishers and video watchers.

A sweepstakes contest doling out an Apple a day was possibly the smartest move YouTube made in the early days. Users collected entries in the drawing by posting more videos and inviting new users, and the $250 iPod Nano had enough trendy cachet and monetary weight to become a real incentive.

On top of that move, YouTube videos quickly caught on with another fast-growing Internet community as MySpace users started embedding videos in their personal pages. On the back of growth phenomena like these, YouTube exploded from a good idea to a million video views a day in just a few months. YouTube was Slashdotted in August, 2005, and co-founder Jawed Karim took that as an early sign of breaking through to the masses. Now, YouTube dwarfs Slashdot in traffic volume and mainstream cred. My, how times change.

Through a connection the three co-founders shared from their time together at PayPal, they drummed up $3.5 million of venture funding from Sequoia Capital, then another $8 million in April, 2006. YouTube was already on its way to becoming one of the most popular online destinations when the buyout rumors started circling. When Google bought the service for $1.65 billion in October, 2006, YouTube was a bona fide cultural phenomenon that had single-handedly revolutionized the way we use the Internet.

Challenges

At the time of the Google buyout, Entrepreneur Magazine reported that YouTube was spending $1 million a month on bandwidth bills, as users were uploading 65,000 videos and watching 100 million clips daily. That educated guess works out to an average hosting cost of about $0.01 per video watched, which doesn't sound like much until you multiply it by 3 billion showings a month. While the site did have some serious advertising partners like NBC and Warner Music Group, the advertising revenue fell far short of covering the costs. As of Google's 2008 annual report, the company claimed to have invested "considerable time and resources" in YouTube, but "we have yet to realize significant revenue benefits" from the acquisition.

Moreover, many of the most popular pieces of YouTube content were copyrighted works like official music videos and clips from TV shows like Saturday Night Live and Comedy Central. YouTube was attracting lawsuits like a honey pot attracts black-hat hackers (or bees, I guess), and billionaire entrepreneur Mark Cuban noted in his typical sweet way that "anyone who buys YouTube is a moron."

What's the big deal?

But YouTube brought a lot of new things to the table.

Playback Just Worked (TM) as long as you had the Adobe Flash player installed. No more codec headaches or download-and-watch roundabouts, and it was a simple installation that would also let you play Bookworm and Bedazzled, among other things. Indeed, Flash was popular long before it became the industry standard handler for online video streams. Hold that thought.

Uploading videos was almost as easy as watching them, as long as your material fit inside the 10-minute and 100-megabyte box that YouTube provided you in the early days. You were—and still are—free to upload movies in a variety of formats, from longtime favorites like .MPG and .AVI to cell phone standard .3GP and high-quality h.264 encodings. YouTube's servers do the dirty work of converting the file to the .FLV format that Flash likes to play, and you're done. No fuss, no muss, and most importantly, no payments.